From Texas, I mostly cover the energy industry and the tycoons who control it. I joined Forbes in 1999 and moved from New York to Houston in 2004. The subjects of my Forbes cover stories have included T. Boone Pickens, Harold Hamm, Aubrey McClendon, Michael Dell, Ross Perot, Exxon, Chevron, Saudi Aramco and more. Follow me on twitter @chrishelman.

In a public dressing down of its flamboyant founder Aubrey McClendon, the board of Chesapeake Energyannounced today that it was removing him from the role of chairman. That role will soon be filled, they said, by a person “with no previous substantive relationship with Chesapeake.”

McClendon will continue on as chief executive, but with significantly more board oversight. The company said that McClendon had relented to the early termination of the conflict-ridden Founder Well Participation Program, in June 2014.

Today’s announcement follows on one last Thursday in which the Chesapeake board said that McClendon had not fully disclosed to them the extent and details of the $1.1 billion in personal loans that he had received from Chesapeake’s corporate lenders. With these loans McClendon had paid his share of drilling costs under the FWPP, which entitled him to acquire a 2.5% share in every one of the thousands of wells that Chesapeake drills each year.

Already the SEC and the IRS have launched investigations into McClendon’s sweetheart perk.

In his first public comments on the controversy, Chesapeake’s biggest shareholder, O. Mason Hawkins, the head of Southeastern Asset Management, said in the statement: “We are pleased that the board has listened to our input and believe it has made the right decision by ending the FWPP early and seeking an independent chairman.” His comment indicates displeasure with the recent revelations. With 13% of shares, Southeastern will certainly play a role in finding a new chairman.

All of this is excellent progress in removing the clear conflicts of interest. As I’ve written before, the FWPP does not align McClendon’s interests with shareholders because it requires only that McClendon pay his 2.5% share of costs on the wells that Chesapeake drills; it does not make McClendon pay anything towards the billions of dollars that the company has sunk into acquiring acreage that it may never drill at all.

This matters because Chesapeake only drills on portions of its acreage that it has determined are the “sweet spots” likely to hold the most oil and gas. Acreage that holds these sweet spots is worth multiples more than less attractive surrounding acreage.

The question that needs to be answered is this: how are McClendon’s pro-rated acreage costs calculated? Are they based off of the average price that Chesapeake paid for surrounding acreage? Or are the costs escalated to properly reflect the plots’ higher perceived value?

McClendon got his start as a land man, and has over the years been the driving force behind Chesapeake’s “land machine” — its thousands of contracted land men who scour the countryside snapping up land, often at record prices. Some of that land has turned out to be virtually worthless for oil and gas (like that acquired in Michigan) and other tracts, like in the Haynesville shale, that the company has told me are not economic to drill now or at any time in the foreseeable future. Chesapeake shareholders care about all these sunk acreage costs because it represents their capital going to waste. But under the terms of the FWPP, McClendon isn’t incentivized to care at all. On the contrary, it is in his direct financial interest for Chesapeake to grab as much land as possible in order to secure those sweet spots that he will get to personally invest in.

It’s good that both the board and McClendon have agreed to end FWPP, but 2014 is still two years away. Until then this conflict of interest will continue to hang over Chesapeake and give investors a reason to shun the company’s shares (which are nonetheless up 9% in late morning trading).For more on this issue, check out:

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